State goes after the FONCE once again

The Department of Revenue is once again taking on FONCEs, the cutesily-acronymed businesses that Bredesen administration officials describe as one of the stateâ€™s greatest tax dodges.

Revenue Commissioner Reagan Farr delivered a report Thursday laying out the administrationâ€™s case for taxing commercial rent from â€œfamily-owned non-corporate entitiesâ€ in the same manner as other business rent.

The move comes a year after lawmakers rejected the change amid heavy lobbying by landowners.

The departmentâ€™s report retraces pretty much the same ground as last year â€” that only the wealthiest landowners benefit from the exemption, that family-owned shouldnâ€™t be able to get tax breaks those owned by unrelated people canâ€™t, that money lost by keeping the loophole open has to be made up with taxes on others.

But Farr said the report does address three objections that tripped up FONCE reform last year:1. Why isnâ€™t FONCE being introduced as its own piece of legislation? This year it is.2. How many businesses are impacted? 3,200, about a fifth of which are out of state.3. How much money will it raise? $25 million, even after assuming a significant number reincorporate under another form to avoid the tax.

Weâ€™ll leave it to others to predict whether thatâ€™ll be enough to bring the General Assembly around to the Farrâ€™s way of thinking.